Iwata then covered how Nintendo has changed. His first point was how things in the industry have gotten bigger. The western world has gotten bigger in that it?s now a larger game market than the eastern world with over 17 billion dollars in sales. The complexity of games has also sky rocketed. This means that staffing needs have also expanded along with the increase in the cost to make video games. Iwata projects that soon, the average game will have a development budget of 8 digits, without marketing.

Iwata then discussed the ways the industry has gotten smaller. Companies want smaller risk and smaller variety. They want games that they know will sell because games just like them have sold in the past. The definition of game genres has also become quite small. At the moment, we wouldn?t be hard pressed to fit any game into a specific category. With all these specific genres of games that seem to cover everything, Iwata wants to know who we are leaving behind.

He then addressed the current misconception that many people have about Nintendo ignoring the hard-core gamers. Iwata?s response was to ask those people why a company ignoring the core gamers would make titles like Metroid for the DS, Resident Evil 4, and one of the most highly anticipated games of the year the upcoming Zelda game. Iwata then wowed us with some brand new footage of the game. And I must say, it looks fantastic.

It was then time to discuss the upcoming wireless function for the Nintendo DS. Iwata asked everyone who had a birthday this week to stand up and come up to the stage. He handed them each a DS complete with a new Mario Kart game. The eight of them, including Iwata, started a pick up game of Mario Kart to show off the wireless feature and, naturally, Iwata played as Mario. At the end of the race, one of the birthday boys finished first with Iwata right behind him. Entertainment level aside, the fact that eight people playing online together over the DS was pretty awesome. And if that wasn?t enough to get you excited, Iwata also gave us some excellent news about the wireless feature. He said that once the new DS?s ship, all the wireless service will be 100% free of charge.

In order to further demonstrate Nintendo?s desire to make novel new games, we got a sneak peak at two new games on their way to the DS. The first game was an amazing pet simulator called Nintendogs. Nintendogs starts you off in a pet store where you take your pick of the litter and take the adorable puppy home. From there you can play with the puppy using the stylus, which includes throwing around and using the multitude of items available to you, or even just giving your dog a scratch behind the ears. The most impressive part of the game was the voice recognition system. You can teach you puppy tricks that are tied to certain commands. The commands aren?t predetermined; you set them as you teach you puppy tricks. The response to commands is so smooth and natural that it was hard to remember that this wasn?t a real dog.

The other game up for show was a strange music composing entertainment program called ElectroPlankton. The game had several modes of play including a theme song re-mixer that was currently playing the theme to Super Mario Bros. By manipulating the flow of things, or by placing little electro plankton in the way of the flow of water, you can create rhythmic sounds that will gradually get more symphonic as time passes. One of the coolest modes of play was the playback mode. In this mode four fish swim across the screen and you grab one and record something in the real world. Once you let the fish go, it starts swimming again and will play back the recording at the appropriate time. By timing your recordings, and with a bit of skill, you can create awesome beat box tunes all by yourself, or if that isn?t your cup of tea, then you can be a one-man quartet.

With two very impressive games out of the way, Iwata finally took a few moments to make a couple announcements about the next generation console from Nintendo called the Revolution. He revealed that Nintendo has partnered up with IBM and ATI to create the processor and graphics cards codenamed the Broadway and the Hollywood respectively. Iwata also announced that the Revolution will not only be backwards compatible with the GameCube, but will have wireless capability built into every system.

Iwata brought the speech to a close by giving us some insight into the industry. He said that despite all our many, many differences, we in the gaming industry are all fundamentally the same in one way: we all have the heart of a gamer.